ADT 2012 Annual Report Download - page 63

• The Company fails to obtain a satisfactory agreement from any successor to assume and agree to
perform the Company’s obligations to the executive under the CIC Severance Plan.
If an executive remains employed for more than 150 days following the occurrence of any event set forth
above, any subsequent retirement or termination of employment by the executive that is not initiated by the
Company will not constitute a “Good Reason Resignation.” Whether an executive’s termination is as a result of a
“Good Reason Resignation” is determined by the administrator of the CIC Severance Plan.
Elements of Compensation—Tyco Programs
Tyco’s executive compensation program incorporated four primary elements consisting of base salary,
annual incentive compensation, long-term incentive compensation and executive benefit plans and other
elements of compensation.
Base Salary
The Tyco Compensation Committee determined that none of our named executive officers should receive a
salary increase for fiscal year 2012. Instead, the Tyco Compensation Committee determined that any salary
increase should go into effect at the time of the Separation to account for the increased level of responsibility of
our named executive officers in their new roles with ADT.
Annual Incentive Compensation
For fiscal year 2012, annual incentive compensation for Mr. Gursahaney was paid by Tyco in the form of an
annual performance bonus under Tyco’s 2004 Stock and Incentive Plan (the “2004 SIP”). For fiscal year 2012,
annual incentive compensation for Messrs. Boerema and Edoff and Mses. Mikells and Graham was paid in the
form of an annual performance bonus under Tyco’s Annual Incentive Plan (AIP).
In the first quarter of fiscal 2012, the Tyco Compensation Committee established performance measures and
targets for Tyco (and for each group, division and business segment), and set a minimum performance threshold
of $450 million in adjusted net income (adjusted for (i) business acquisitions and disposals, (ii) debt refinancing,
(iii) legacy legal and tax matters, (iv) goodwill and intangible asset impairments for businesses acquired prior to
2002, (v) changes in accounting, (vi) asset impairments triggered by the Separation and (vii) Separation related
costs) that had to be met in order for Tyco’s named executive officers to receive any bonuses for the year. The
net impact of these adjustments did not determine whether the minimum threshold was met. These metrics were
also approved by the independent members of the Tyco Board of Directors. The Tyco Compensation Committee
also approved individual maximum bonus amounts for Mr. Gursahaney of 0.25% of adjusted net income, subject
to a cap of $2.5 million. After setting these minimum performance thresholds and maximum payouts, the Tyco
Compensation Committee further refined target and maximum payout values as a percentage of base salary. The
target incentive opportunity for our named executive officers ranged from 50% to 100% of base salary for fiscal
year 2012. Potential payouts ranged from 0% to 200% of the target incentive opportunity.
The performance measures approved for the corporate and group levels of the organization (including Tyco
Security Solutions, of which ADT was a part) were also established in the first quarter of fiscal 2012 and were
used by the Tyco Compensation Committee and the Tyco Board of Directors in the determination of final
bonuses for Tyco’s named executive officers. For our named executive officers, who were impacted by Tyco’s
management and segment realignment in the second fiscal quarter of fiscal year 2012, the Tyco Compensation
Committee primarily considered the operating results of ADT. These results were subject to a plus or minus 25%
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